The Southern District of New York Rules That Internships Must Be Educational (Unlike the Vince Vaughn and Owen Wilson Film of the Same Name)

by BakerHostetler
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It has been said that the vast majority of movies coming out of Hollywood these days are “brainless.” Despite that (often accurate) description, there are always a handful of films that manage to squeak into theaters and earn critical praise for their intelligent, thought-provoking stories, and educate the audience on a particular subject matter or character. It is ironic, perhaps, then that the critically praised Black Swan, which garnered Natalie Portman a Best Actress Oscar in 2011, was the subject of a lawsuit brought by several interns who claimed that their unpaid internships on set were so brainless and devoid of education that they were more properly classified as employees. The Southern District of New York agreed with the plaintiff interns and ruled that they (and the class) were, in fact, performing the work of employees and were therefore entitled to the rights and benefits thereof.

Before pecking into the meat of the court’s decision in Glatt, et al. v. Fox Searchlight Pictures, Inc., Case No. 1:11-cv-06784 (S.D.N.Y., June 11, 2013), it is worth noting that the case spans the country from coast to coast. The action was brought as a putative class (and collective) action under the Fair Labor Standards Act, New York Labor Law, and California Unfair Competition Law. This alone makes the fact that the plaintiffs won summary judgment and class certification on the question of their employment status potentially devastating for employers nationwide.

In support of its ruling for the plaintiffs, the court turned its lens on to examine what the plaintiffs were doing as “unpaid interns” for Fox Searchlight. Because the FLSA demands that any employer who “suffers or permits work” must compensate its employees, the statute enumerates six criteria for determining whether an internship may be unpaid:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion, its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship;
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent on the internship.

Id. at *31. Put into shorthand, the film studio could not “feather its nest” during the production of Black Swan by “hiring” unpaid interns to perform work that would otherwise have gone to paid assistants or aides. An internship should be an educational experience that benefits the intern (and less so the studio). The closer to an educational environment (not necessarily a “classroom” environment), the more likely that a court will find the internship may be unpaid without violating the FLSA. It was in this regard that Fox Searchlight laid a big, fat egg.

The record displayed that the interns were performing “routine tasks that would otherwise have been performed by regular employees.” Id. at *37. For example, one of the plaintiffs spent his time obtaining documents for personnel files, picked up checks for coworkers, tracked and reconciled purchase orders, traveled to the set to get signatures, making photocopies, organized file cabinets, drafted cover letters, assembled office furniture, took out the trash, took lunch orders, made deliveries, and ran errands. In the court’s eyes, “This is work that otherwise would have been done by a paid employee.”

The court did point out that while the interns did receive some benefit from the work in the form of resumé listings, job references, and an understanding of how a production office works, those benefits were “incidental” to working in the office like “any other employee” and were not the result of a structured internship that was designed specifically to benefit them.

Ultimately, the ruling will ruffle more than a few feathers. Unpaid internships (both in the film industry and for any employer) are a source of potential litigation as employers continue to try to find a golden egg by acquiring low-cost labor in a difficult economy. In fact, just over a month ago, we noted a case from the same district that denied conditional certification for interns. Wang v. The Hearst Corporation, Case No. 12-CV-793 (HB) (S.D.N.Y. May 8, 2013). The court in that case, however, denied the plaintiffs’ motion for class certification without spending a great deal of time analyzing what duties the interns performed. 

It is notably apropos that just last weekend, Hollywood uncaged the derided (and likely brainless) The Internship upon the world. While it is unlikely that the Southern District of New York timed its decision in Glatt to coincide, the fact remains that employers must be more vigilant than ever to ensure that any unpaid interns are, in fact, meeting the necessary criteria of the FLSA. Merely finding an individual who is willing to “work for free” is not enough.

The Bottom Line: This a dangerous case for employers, plain and simple. Fox Searchlight now faces an uphill battle, given that the plaintiffs have a certified class and a summary judgment ruling finding that they are properly classified as employees, rather than unpaid interns.

*Please note that this author specifically avoided using the obvious comparison to “The Ugly Duckling.”  Until now.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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